A recent case demonstrates the dangers of self-representation in real estate cases and outlines a seller’s duty to mitigate damages when the deal falls through.
The buyers had agreed to purchase the sellers’ property. However, after the market declined and the buyers found themselves unable to sell their own home, they failed to complete the purchase with the sellers.
The sellers ultimately sold their house at a lower price and sued the buyers for damages. They were successful and were awarded summary judgment for $135,841 in damages and an additional award of $8,000 in costs.
The buyers appealed to the Ontario Court of Appeal.
The buyers raised three arguments on appeal:
(1) The motion judge erred in declining to adjourn the motion;
(2) The motion judge erred in rejecting the buyers’ interpretation of the agreement; and
(3) The motion judge erred in his conclusion that the sellers had mitigated their damages.
Procedural Fairness Argument
The court of appeal did not find any merit to the buyers’ first ground of appeal. The buyers, who were self-represented throughout the previous proceedings, argued that they had been denied procedural fairness. In particular, they said that the motion judge ought to have adjourned the motion so that they could obtain the evidence of their broker in response to motion, as well as legal counsel. They also asserted that the scheduling of the motion did not take into consideration their personal circumstances and that they ought to have been given time to provide responding materials.
The court found that the scheduling judge had made it clear that the buyers could move for an adjournment, even though they had not been present on the date the motion was scheduled. Additionally, the buyers were aware of the requirements and deadlines for submission of responding materials, and they were the ones who did not respond to a letter from the sellers’ lawyer regarding scheduling. Finally, the court found that it was only after the motion judge read out his reasons granting the motion that the buyers requested an adjournment and suggested that they wanted the opportunity to bring the broker to court. As a result, the court found that the refusal to grant an adjournment was a proper exercise of the motion judge’s discretion and there was no unfairness in how the motion proceeded.
Sale Agreement Interpretation
The court did not find merit to the second ground of appeal that the motion judge erred in rejecting the buyers’ interpretation of the agreement. The buyers’ offer to purchase had contained conditions that the sellers did not accept and struck out; instead, their agent inserted a hand written notation stating “buyer to provide additional deposit of $10,000 as soon as buyer sells property located at [location] and after deal is closed we will provide the money.”
The motion judge concluded that the inserted words did not make the agreement conditional and that the words only dealt with the deposit. The court of appeal found no reason to interfere with the motion judge’s interpretation of the agreement which they found was reasonable and entirely consistent with the evidence. It found that buyers offered to negotiate a lower purchase price, but did not take the position that the agreement was conditional.
Duty to Mitigate Damages
Finally, the court looked at the buyers’ argument the motion judge erred in his conclusion that the sellers had mitigated their damages when they sold the property for $610,000 in October 2017, three months after the scheduled closing with the buyers and for $120,000 less than the amount the buyers had agreed to pay. The court did not find merit in this argument, noting that the sellers delivered a supplementary affidavit that referred to the downturn in the market and the sale they were able to conclude. The court found this evidence sufficient to support their claim for damages and adequately demonstrated their efforts to mitigate.
As a result, the appeal was dismissed and costs to the sellers were fixed at $7,500, in addition to the original cost award and damages amount.
There are significant legal and financial risks in entering into a residential real estate transaction. Such large purchases should not be made without proper guidance from an experienced lawyer. Without sound legal advice, you could end up paying more than you should for your home, or accept an offer that is too low, or worse yet, end up with a transaction that falls through due to missed paperwork, or details and technicalities that go unnoticed.
At DBH Law in Calgary, our real estate lawyers have more than 25 years of combined experience acting for purchasers, lenders, and developers through all stages of residential real estate transactions.
We help our clients avoid huge areas of risk, including poorly drafted or incomplete agreements of purchase and sale, hidden fees, encroachment or easement issues, complex concerns like properties held in trust, and similar pitfalls. We also look for contract language which may impose unfavourable duties or obligations. To learn more about how we can help, contact us online or by phone at 403.252.9937.